Legislative and Regulatory News

Chesapeake still at odds with Pennsylvania’s Attorney General in royalty fight

Oklahoma City’s Chesapeake Energy won’t escape a lawsuit filed by Pennsylvania Attorney General Josh Shapiro in a fight over natural gas drilling leases.

The Commonwealth Court ruled the Attorney General can move ahead with Unfair Trade Practices Act cases against Chesapeake and Anadarko Petroleum Corp. The court ruled the natural gas leases in “trade” and “commerce” covered by the state’s Unfair Trade Practices and Consumer Protection Act.

But the court rules against the AG’s contention the two companies made an unlawful market sharing agreement to not lease properties for drilling in areas where one or the other company was operating.

However, with respect a separate count argued by the Attorney General that the companies allegedly disingenuous and misleading behavior constitutes unfair methods of competition and unfair or deceptive acts or practices under the Unfair Trade Practices Act, the Court sided with the Attorney General.

The Court remanded to the Bradford County trial court for further action on the counts upheld by Commonwealth Court.

“Today’s Commonwealth Court ruling is a victory that upholds our lawsuit against Chesapeake Energy Corporation and Anadarko Petroleum Corporation,” said Attorney General Shapiro. “The court’s decision allows our action to move forward and address the misconduct by these companies against landowners in oil and gas leases under the Unfair Trade Practices and Consumer Protection Law. I’m fighting for landowners who we charge have been ripped off, and my Office will continue to pursue this case on behalf of Northeast Pennsylvanians.

Chesapeake Energy had reached a $30 million settlement agreement with Pennsylvania landowners in separate private class-action cases based on allegations of improper or inflated deductions from gas royalty payments.

Chesapeake attorneys told a federal judge the company reserved the right to pull out of those proposed settlements covering all 14,000 of its Pennsylvania gas-producing leases if it could not resolve the attorney general’s case.

The attorney general’s office alleges Chesapeake violated the state’s unfair trade practices law by inflating prices for shipping gas from wells to pipelines and then passing the costs on to Marcellus Shale royalty owners, whose monthly checks sometimes diminished to zero.

SB 817, which would require BTU info to be added to check stubs, is set for hearing TOMORROW, March 20 at 9.a.m.

NARO-Texas supports this bill. Please contact the Senators on Natural Resources to let them know you support the bill. Natural gas prices are based on BTU factor, so it is very difficult to find out if you are being paid correctly unless this info is on the check.

The link for the committee and links for all members is below.

Natural Resources Committee

ALERT, ALERT, ALERT! A BILL HAS BEEN FILED IN TEXAS TO TAKE AWAY YOUR ABILITY TO SUE FOR BREACH OF CONTRACT IF AN OPERATOR INVENTS A TITLE DISPUTE AND STOPS PAYING YOU! HAVING SEEN MANY OPERATORS WHO USE FLIMSY TITLE ISSUES TO HOLD ONTO ROYALTY MONEY THIS NEEDS TO BE OPPOSED!

Link to HB 3372

NM Legislative session ends, proves ‘difficult’ for lawmakers defending oil and gas. For lawmakers from the southeast corner of New Mexico – an area known for conservative ideals and heavy support of industry – the now-concluded, two-month legislative session was mostly spent defending the needs and values of their constituents. It was not an easy conversation, said State Sen. Gay Kernan (R-42) of Hobbs. “I would describe the session as difficult and challenging,” she said. “We played defense most of the time for oil and gas. We were able to stop some of the things that were not good, but we also failed to stop some legislation.” For State Rep. Cathrynn Brown (R-55) of Carlsbad, the Democrats who assumed control of the Legislature and Governor’s Office after January’s election were too eager to spend the more than $2 billion surplus she said came from the oil and gas industry and the rural communities that support it. And House Minority Leader State Rep. Jim Townsend (R-54) of Artesia said many lawmakers from metropolitan areas simply don’t comprehend the needs or mentalities of less populated, far-flung regions of the state.

Update on bills of note in Texas-

HB 3838 – ROYALTY LEASE SCAM

This bill is set for hearing this Monday, March 25 at 2:00 p.m. in Energy Resources. We need help with:

Calling committee members and express support for the bill – link is Texas Legislature Online - Committee Membership

Please especially call if you or a relative got taken in by this scam.

HB 3226, to amend MIPA (the forced pooling statute) to allow drilling permits to be good for 2 years instead of one, had a hearing. Due to potential for mischief here, we are keeping a close eye, but the sponsor and committee members have pledged not to allow any floors amendments that would open up the door for broader forced pooling.

SB 817, to require BTU values to be added to royalty stubs. We will support also. Hearing was yesterday. Have not heard yet how it went.

HB 3372 is a very dangerous bill. Craddick is the sponsor, which is puzzling, but it prohibits breach of contract actions against payors when money is withheld due to a title dispute. Apparently they think they are protecting Sunoco and the other gatherers who are payors but not the operator from being drug into a suit, but very concerned it will be interpreted to give carte blanche to withhold money for flimsy title dispute reasons and be insulated from getting the lease terminated.

SB 1156 increases setbacks to 1500’ around private schools and child care facilities. No movement yet.

IMPORTANT UPDATE ON HB 3838 - ROYALTY LEASE SCAM BILL

The Texas House Energy resources Committee had a hearing on the bill yesterday, and it went well. Committee members seemed sympathetic to stopping this scam, and there were no witnesses that spoke against the bill. NARO and TIPRO spoke in favor of the bill, and TLMA registered support.

Of course, it is not the public speakers we have to worry about, it is the people going through back channels. We need to get this bill out of committee and on the House Floor ASAP, so we can also get it through the Senate.

The major issue at this point is that TexOGA has a competing version of the bill they want to push which has some unacceptable limitations, which made the old law, Sec. 5.151 of the Texas Property Code, ineffective.

We are asking EVERY Texas NARO member to call, email, write, or visit the members of the Energy Resources Committee and urge them to:

  1. Support the current version of HB 3838 supported by NARO and the others, and not TexOGAs version;
  2. Vote HB 3838 out of committee.

Below are links to: a) the current committee substitute bill HB 3838; b) the members of the Energy Resources Committee with contact information; and c) talking points about why this bill is necessary. We need to get this practice stopped!

The TexOGA version is too restrictive because: a) a 2 year statute of limitations is too short; b) limiting liability to the initial purchaser allows the sellers to wash liability by running it through a shell company; and c) it keeps the ridiculous limit that the law does not apply as long as they send the offer and the lease in two different envelopes.

Proposed Committee Substitute (NARO backed version) 86R CSHB 3838 as of 3.25.pdf (50.1 KB)

Members of Energy Resources - Link

Talking Points - TAB 3.pdf (70.9 KB)

Royalty Lease Scam - UPDATE ON HB 3838 - IMPORTANT
Important update on hb 3838-royalty lease scam bill
Royalty Lease Scam Bill - URGENT UPDATE ON HB 3838
Royalty Lease Scam Bill Update On HB 3838 - IMPORTANT
IMPORTANT - Update On HB 3838 – Royalty Lease Scam Bill
IMPORTANT UPDATE - ON HB 3838 - Royalty Lease Scam Bill
UPDATE ON HB 3838 – Royalty Lease Scam Bill - IMPORTANT
URGENT - Update on HB 3838 – Royalty Lease Scam Bill
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Important update on hb 3838 - royalty lease scam bill
Important information on hb 3838 - royalty lease scam bill
Important: HB 3838 The Royalty Lease Scam Bill
Important update on hb 3838 – royalty lease scam bill
Urgent update on hb 3838 – royalty lease scam bill
Royalty Lease Scam Bill - IMPORTANT UPDATE ON HB 3838
Urgent update on hb 3838 - royalty lease scam bill
Important - Royalty Lease Scam Bill- UPDATE ON HB 3838
URGENT - Update On HB 3838 - Royalty Lease Scam Bill
Update On HB 3838 - Royalty Lease Scam Bill - IMPORTANT

Pueblo council, commissioners urge Polis to block gas bill. Arguing that a major employer is at risk, most Pueblo County commissioners and City Council members are asking Gov. Jared Polis to block legislation that would change state oil and gas development regulations. It’s a political longshot: Earlier this year, Polis helped unveil Senate Bill 181, which overhauls the Colorado Oil & Gas Conservation Commission and gives local governments more control over development in their areas. It’s a bill supported by majority Democrats in the Legislature, and it has passed through the Senate earlier this month and two House committees since then. It is awaiting action by the House Appropriations Committee before coming to the full House for consideration. The oil and gas industry has rallied the support of many business groups around the state in opposing the bill, which includes the Pueblo Economic Development Corp. and Greater Pueblo Chamber of Commerce. In a March 21 letter to Polis, six Pueblo council members and two county commissioners urge him to stop the legislation, saying it could damage EVRAZ Rocky Mountain Steel and its tube and pipe sales to the state’s gas industry.

House Republicans target oil and gas measure with filibuster. State House Republicans appear to have few options for preventing an overhaul of Colorado’s oil and gas industry backed by majority Democrats, so on Tuesday they stalled. GOP lawmakers also fought unsuccessfully to have a clause added to the oil and gas bill that would allow opponents to try to block it through a voter petition drive. Senate Bill 181 would hand local governments control over industry development and operations, increase emission monitoring and direct the Colorado Oil and Gas Conservation Commission to prioritize public health and the environment over fostering the industry. The House Finance Committee approved the measure Monday evening, passing it to the Appropriations Committee. That party-line vote has been the story of the measure since it was introduced last month. Democrats have pushed the measure through the legislature with Republicans in vehement opposition.

Wade, So are people getting unsolicited offers to purchase, thinking they are leases, but they are actually sales? I’ve probably had some of those, but not interested in selling, so trash them.

Is called a “Royalty Lease” and looks like an oil and gas lease, but you are actually selling 75% of your royalty stream for the life of the lease. Is really a term royalty deed disguised as a lease.

Thank you sir. I have not seen that I think, but don’t always have time to read the stuff before it goes in the shredder. Thanks for going to bat for the people that may not understand.

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Proposal to drill for shale gas at U.S. Steel site near Pittsburgh prompts contentious hearing . [State Impact Pennsylvania] At hearing Wednesday night on a proposal to drill for natural gas at a U.S. Steel facility in the eastern Pittsburgh suburbs, dozens of residents and environmentalists lined up to speak out against the plan, as well as grill state officials and company representatives with questions. New Mexico-based Merrion Oil and Gas wants to drill at the Edgar Thomson plant next year to supply natural gas to the steelmaking facility. It has already secured some approvals from municipalities in the path of drilling, and now it’s seeking several permits from the Pennsylvania Department of Environmental Protection. In addition to building a wellpad and drilling in the Marcellus Shale, the company also plans to build access roads and two pipelines, including one for gas and one for water.

Natural gas industry has generated $45.8 million in taxes in eastern Ohio . Over the past nine years, the oil and gas industry has brought jobs, better roads and increased tax revenues to counties and school districts throughout eastern Ohio. That was the message that Mike Chadsey, director of public relations for the Ohio Oil and Gas Association, brought to members of the New Philadelphia Rotary on Tuesday. Between 2010 and 2015, the industry has paid $45.8 million in taxes in six Ohio counties — Belmont, Carroll, Guernsey, Harrison Monroe and Noble, he said. During that time, it paid $14 million in property taxes in Carroll County and $11 million in Harrison County. In addition, the industry has spent $302.6 million to improve 639 miles of highway in eastern Ohio. That includes $44.7 million in Carroll County for 99.33 miles of roads and $31.4 million in Harrison County for 54.75 miles of roads. Energy companies have invested $8.1 billion on five pipeline projects. Kinder Morgan spent $500 million to build the 215-mile-long Utopia Pipeline and Energy Transfer spent $4.3 billion to build the 570-mile-long Rover Pipeline. Both pipelines run through Harrison, Carroll and Tuscarawas counties. Tax dollars generated by the industry have benefited local school districts.

Tribes urge US to put off oil, gas leases near sacred sites . Tribal leaders are calling on U.S. land managers to put off an upcoming oil and gas lease sale, the latest in an ongoing battle over energy development in a region that’s home to a national park and other sites of cultural and historical significance. The tribes say the federal government is obligated to follow environmental and historic preservation laws when considering whether to allow for oil and gas exploration in northwestern New Mexico. They’re concerned about more than two dozen parcels that will be up for bid Thursday. In asking the Bureau of Land Management to defer the lease sale, the All Pueblo Council of Governors renewed its call for formal protections to be included in a plan being drafted by that agency that will govern future development throughout the San Juan Basin.

Oil and gas bill advances to Colorado House amid warnings about impacts on the industry A bill that would change oil and gas regulations by prioritizing public health and safety and clarifying communities’ role in overseeing development was sent to the full Colorado House on Wednesday after it cleared the last committee. Oil and gas trade groups and some business organizations and local elected officials have called on lawmakers to slow down the bill and give people more time to weigh in. They warn that if the bill becomes law, it will endanger a multi-billion-dollar industry that supports tens of thousands of jobs and generates hundreds of millions of dollars in tax revenue for schools and local governments.

Proposed Colorado ballot measure designed to repeal expected oil, gas reform bill . Officials in two of Colorado’s largest oil and natural gas producing counties are pushing a ballot measure that would repeal reform legislation on the fast track to the governor’s desk. The proposed ballot item, initially titled the Oil and Gas Independent Regulatory Act, could be on this November’s ballot. Supporters face a deadline of April 5 to submit the measure title and final language to the Secretary of State’s Office. Supporters would also need to secure more than 124,000 valid voter signatures by Aug. 5 to make the ballot. The proposal is designed to nullify state Senate Bill (SB) 181

House gives preliminary OK to oil and gas bill that has roiled Colorado General Assembly. A bill assailed by critics as a threat to Colorado’s multibillion-dollar oil and gas industry and hailed by proponents as necessary to ensure public health, safety and local control cleared its first hurdle in the House late Thursday night. After nearly six hours of debate, the House gave preliminary approval to Senate Bill 19-181. It still must pass a final hearing in the chamber. The legislation would revamp the state’s oil and gas regulations by changing the mission of the Colorado Oil and Gas Conservation Commission and putting public health and safety front and center when development is considered. It would also clarify that local governments have the authority under their planning and land-use powers to regulate oil and gas as they do other types of activities.The oil and gas industry, several business organizations and elected officials from energy-producing areas contend cities and counties might try to ban drilling or slow development, reducing the millions of dollars in tax revenue for schools and local governments and jeopardizing tens of thousands of jobs.

ALERT! Operators are going to try to push HB 3372 and SB 1988 out of committee. This bill will take away your ability to sue for breach of contract if an operator puts payments in suspense, even for flimsy or fake title issues. There is no reason you should not be able to put in your lease, and enforce, a provision that restricts when an operator can put you in suspense. Call the members of the Civil Jurisprudence Committee and the members of the Senate Natural Resources Committee and tell them you are opposed!

House committee

Senate Committee

HB 3838, the bill to stop the royalty lease scam, has been voted out of committee and now goes to the House floor for a vote. Please call your State representatives and ask them to vote for this bill!

Where to find contact info for your representative

The Texas RRC has revised their rules on commingling applications. Since these applications are becoming commonplace, as operators try to consolidate production facilities, being familiar with the rules is important, because large numbers of horizontal wells, involving multiple leases, are being commingled, and your royalties can be greatly affected. NARO Texas had a presentation at its Dallas Town Hall event by the former GLO person who handled all commingling applications, and is now a private consultant. NARO Texas also filed comments on the rule changes.

Link to revised rules and forms